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Category: Commodity Trading

Africa must change attitude towards aid - Dr Frazer

What slows down Africa’s socio-economic transformation? Where does the continent fail at times? Where is the potential? These are some of the questions that many have regarding the continent that for many years has had to contend with an unfortunate tag of a ‘sleeping giant’. To get answers to these and other questions, The New Times’ Collins Mwai sat with Dr Jendayi Frazer a former U.S. Assistant Secretary of State for African Affairs and an investor in Rwanda. Dr Frazer also sits on the board of the MasterCard Foundation which has so far extended support to Rwanda worth over $85M.

Below are the excerpts:

As an international investor, what informed your interest in the Rwandan market?

I have invested with partners such as Tonny Elumelu in a company called Africa Exchange Holdings that owns East Africa Exchange based in Rwanda with regional aspirations and just getting started in Kenya.

The main reason why we invested in Rwanda was because of its investment-friendly environment such as the fact that you can start up a business very fast here and get support from the government.

It is a corruption-free zone which enables business to be done effectively.

How viable is Rwanda as an investment destination for business people keen on entering the market noting its size?

As a business person, I see Rwanda as a country with a very attractive investment environment as a gateway into the East African region. The fact that the East African Community and the Northern Corridor Integration Initiative are serving to integrate the region, you can set your headquarters in Rwanda as an operation base.

That gives you the advantage of operating in an attractive market and the chance to reach a wider EAC market.

Here, you have the advantage of ICT systems, infrastructure whereas the rest of the market gives you numbers.

From your diplomatic career, any observations concerning the ongoing regional integration initiative?

The vision of the presidents needs to be translated down to their ministers. At the presidential level, there is a very clear understanding that the market is at its best when integrated as it is sizable.

It means everyone will become more competitive globally. But when it translates down to the ministers you can see sort of nationalistic perspective.

There they want to be first and exclude others from their market. I think presidents need to ensure that there is some collective responsibility and discipline in opening up the market. Their citizens are going to benefit just as much by having access to a larger market.

There are barriers but some of them are designed due to policies or approaches of ministries which in turn creates barriers to the integration process.

During your time as U.S. Assistant Secretary of State for African Affairs, you must have had unrestricted access to vast information on matters Africa. From your deduction, what do you think has been the largest factor holding back the continent’s development?

I think it is a matter of leadership. From the point of view in Rwanda you notice that there has been transformation taking place in about 22 years.

That is a vision executed and impact of leadership. But elsewhere there is a lot of talk, there are lots of conferences where everybody talks about problems and solutions but these are never implemented.

A challenge comes up; everyone is oriented towards solving it but no action towards it.

For example, if you look at South Sudan, the nature of their politics can be quite detrimental, this is true even globally. I cannot speak much as an American given the nature of our politics right now, especially our presidential elections and how distractive it is.

If you look at Kenya, I do not see the purpose of all these protests which are actually distracting business.

Across Africa, governing authorities need to clean up house, they need to have accountability as you see in Rwanda where ministers are driven to achieve something and are held accountable by the public.

There is nothing about Africa that is creating the barriers to development, the only thing is intentionality. There has to be a focus, vision and implementation. We have seen countries such as Rwanda transform themselves rapidly.

Has Africa failed due to its large dependence on aid as opposed to attracting business and funding most of the anticipated development?

I think it is a question of a choice between investment and charity or foreign assistance. I think it is an attitude problem. Certainly one would want investment that is business oriented and mutually interested.

The whole use of foreign aid has been used to drive or dictate the agenda for African countries which is very problematic. There is no problem with humanitarian assistance if you do not expect a country to abide by your every wish.

Development cannot come from outside with people telling you this is what you should do. It is the attitude of foreign aid that says that somehow the west is superior and knows better.

It is the attitude that has a problem. Business is not going to be the savior of Africa either, the only thing that can save Africa is establishing your own agenda whether it is dealing with business or in foreign assistance.

Speaking of independence and avoiding foreign interference, is there a chance that African countries can achieve this while they still depend on aid?

I think it is having self-confidence to do what you think is best for you whatever the consequences. There are enough partners in the world that no single country is totally dependent on any one country or region.

The best strength that Africa has is integration and unification. It is not easy with so many African countries. That is the best chance that Africa has in exercising use of power.

African economies have not been spared by the current global economic slowdown, what’s the best way to build resilience to avoid such shocks in future?

The slowdown that is affecting African economies today is a result of commodities slowdown which is largely about how fast China’s economy is growing because a lot of the commodities are going to China for the last five or ten years.

Those trade relationships are tricky and it is largely about diversification of economies. By having a diversified economy, when one sector slows down, you can still leverage other sectors.

The market should not only be about the outside, it should also be looking in terms of the neighbourhood. Some of the problems from this is that everyone in one region are producing almost the same things.

This can be dealt with thorough actions such as moving towards light manufacturing, services and value addition, that tales vision.

From your time as U.S. Assistant Secretary of State for African Affairs, what did you find to be the largest hindrance to African integration?

It is hard for me to understand. Visas have to do with money, you get money when people apply for visas as well as security. I think it doesn’t help much.

The bad effect of it is not offset by the money or the security achieved.

I think that integration should begin with free movement of people across the continent. That said, it is hard to understand what holds back integration, you would expect that the pan-Africanism spirit would make it easier, but it is not a reality. People fall back into regional or national perspectives which derails the process.

As a board member of the MasterCard Foundation, what is on your checklist and intentions when partnering with Rwanda?

MasterCard Foundation is a foundation which has the freedom for action. From the onset, the original directors were clear that it needed to be focused in its giving.

At that time there were two major focus areas, students scholars education and financial inclusion, putting people who were unbanked into the banked category to bring them into the formal system.

Now we are opening up to youth livelihoods, education and financial inclusion. We also have an understanding that nothing we do is sustainable unless it is in the right environment.

That is why we have to work with governments of like mind and partner with them.

We do not have people on ground; we work through partners, that is why it is very important to work with partner with the right people.

We are certainly learning and building on programmes. We are building an environment and institutional capacity so that they do not ultimately depend on us. That is part of learning. We believe heavily in learning, we do research on them to inform the next step ahead.

We are different from development partners who give with different interest and agenda. We are interested in the development of the continent through the areas we have decided to focus on.

Any new areas of cooperation that you are exploring for the near future?

Another aspect we are building on is secondary teacher education and teacher education in general in a manner that is sustainable. We are trying to figure out how we can build capacities in teachers and how they can transfer the skills and knowledge to learners.

We are looking at using different models of education and we are aiming at being comprehensive in our approach. One of the failures of education in Africa is the lack of investment which has partly been driven by the donor mentality.

Is the private sector in Africa doing enough in education and research or have they left all the work to government?

It has to play a role. The private sector is dependent on a labour force and needs to train them on the technical skills the industry requires, there has to be intervention by both government and the industry players.

Governments should also insist on skills transfer for multi-nationals operating in the country when they allow them to come to their countries.

These should be part of the criteria. Companies also ought to do that without being asked by government.